Question

4. (17 points) You have a food cart. Your daily revenue is normally distributed with a mean of $500 and a standard deviation of $100. » Suppose there is another location that might be worth switching to » You plan to experiment with selling there for awhile, and then use a one-sided hypothesis test with α-.05 to determine whether you should switch. (a) (5 points) If you experiment with selling in the new location for n days, how high does your sample mean have to be to reject the null hypothesis that the new location will generate $500/day in revenue over the long-r. In other words, find the Y" that the sample mean, Y, must surpass to reject the Ho. Express your answer in terms of n, and assume that the new location has the same standard deviation in daily revenue as the old location ($100) (b) (12 points) If the new location has normally distributed daily revenue with a true mean of 510 and a standard deviation of 100, how many days would you have to try selling there to have a power of 80% (Remember Ho is that the true mean is $500, and it is a one-sided test with .05).

Answer 1

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